Have private equity’s ‘Hunger Games’ recruiting tactics gone too far?

I was on my way to dinner with a friend and to catch Game 7 of the Stanley Cup Final on Monday when I received a text from a longtime Wall Street source.

“On cycle kicked off,” this person messaged me at 6:43 p.m. That brief, four-word missive signaled that the Olympics of Wall Street recruiting was kicking off a full month earlier than last year’s process, which was criticized at the time, including by top headhunters, for starting too soon.

“Forget Game 7,” I thought. “The real ‘Hunger Games’ is about to begin.”

Every year, massive buyout firms like Apollo, KKR, and Thoma Bravo start hiring for entry-level associate jobs that won’t actually get underway for another two years. In tandem with external headhunting firms, they tend to fish for talent among the pool of bankers who have just started working at investment banks such as Goldman Sachs and JPMorgan.

The young investment-banking analysts still go through two years of training by the banks. But as they toil over PowerPoint presentations and Excel spreadsheets, they have the allure of lucrative “buy-side” jobs — many of which exceed $300,000 in total comp — to look forward to.

The on-cycle recruiting process is not easy on these young bankers, who are often already working 80-plus-hour weeks in their new investment-banking jobs. As we has previously reported, young bankers have been known to interview in the middle of the night so they don’t get in trouble with their bosses. And the stakes are high: PE firms have been known to demand some of these candidates — many of whom have just graduated from college — say “yes” on the spot or walk away empty-handed.

Adding to the strain, the process keeps getting earlier. Last year’s on-cycle sprint kicked off earlier than ever — in late July — when young bankers were still training for their new jobs. As we reported at the time, it resulted in freaked-out analysts skipping their work training, offsite events, and social plans to haphazardly prepare for the hiring frenzy.

But this year, the process has started so early that many young analysts haven’t even started training yet. Instead, they’re spending what was supposed to be their last days of rest before starting their new jobs frantically setting up Zoom calls from remote vacation areas or hightailing it back to New York City so they won’t miss out, according to my Wall Street tipster.

To the outside world, the frenzy and drama may seem amusing. But to people living it firsthand, it can feel more like a do-or-die fever dream.

“There’s a sickness in the private-equity industry,” my tipster, a former junior banker, told me. “I mean, it’s ridiculous. They haven’t even spent one day on the desk. They haven’t even started training yet. They get sucked into this recruiting cycle that just becomes more and more insane every year.”

As I began calling sources about this round of recruiting with my fellow Wall Street reporter Emmalyse Brownstein, I couldn’t help wondering why this was happening. The conventional wisdom on Wall Street has always been that the most hawkish PE firms walk away with the most impressive candidates. But how can they determine who’s good when their jobs haven’t even started? It feels tantamount to asking for the names of the best restaurants in town when they all opened yesterday and haven’t received a single Yelp review.

What are PE firms actually gaining from this process? Aren’t they only hurting themselves as well as the young bankers they hope to hire one day?

The expert opinion

To answer these nagging questions, I called Anthony Keizner, the managing partner at Odyssey Search Partners, a well-known buy-side recruiting firm. Odyssey doesn’t participate in on-cycle recruiting because it prefers to fill positions in what is known as “off-cycle,” or the months that follow the initial recruiting process.

Keizner agreed that the start of this year’s recruiting felt absurdly early. Most new graduates entering the finance industry have barely gotten their graduation gowns back from the dry cleaner, much less moved into their New York apartments ahead of training for their investment-banking jobs this summer.

He, too, questioned whether starting in late June was actually in the best interest of the employers.

“They’re not just being asked about deal experience because they don’t have any,” Keizner continued. “They’re frankly being asked about what’s their interest in finance” and questions aimed at trying to understand what they accomplished during their summer internships, he said.

The former junior banker, who knows first-year analysts who went through last week’s recruiting tornado, agreed.

“I think it’s bad for PE firms because these kids don’t know what they’re getting themselves into,” he told us. “They’re sold on the idea of doing something and not the actual work itself. They don’t know what it actually is like to work full time in a job for months.”

Another disquieting disadvantage of this brave new world is that it skews in favor of the book-hitters and exam-takers who are “super prepared,” Keizner said. Indeed, many junior bankers don’t even have their work emails set up yet — a primary mechanism recruiters use to track them down and establish contact. Those who nabbed an interview are likely the ones who networked ahead of time, met with recruiters for informal coffee chats, and were already on PE firms’ radars.

It means that only the most plugged-in candidates will have landed a golden ticket: an interview.

“Those people are extra committed and dedicated, and that’s fine, and some of them may be great,” Keizner added. “But we still aspire to hire a wider variety from schools they haven’t hired from before or people with backgrounds they haven’t hired before.”

The rationale — or lack thereof

We have confirmed that firms taking part in this year’s on-cycle recruiting include the asset-management giants Apollo, KKR, and Clayton, Dubilier & Rice. Posts on social-media sites such as the Instagram account Litquidity suggest that TPG and Bain Capital are also participating in the early recruiting push.

I asked headhunters and spokespeople who represent these firms to explain the rationale for starting earlier than ever or to walk me through how it helps candidates. The majority had no comment. Some ghosted me. Others blamed what they described as a rogue recruiter, saying that once someone makes the first move, rivals feel they have no choice but to take the plunge or face the possibility of losing out on top-shelf talent.

Keizner, for his part, thinks these firms are well aware of the risks that come with starting so early. But maybe, he theorized, they don’t actually care, having baked the inevitability that some recruits will prove to be disappointments into their hiring calculus.

“These larger firms are willing to take the risk that some of these hiring decisions will not work out,” he said.

Keizner and the former junior banker also raised the possibility that starting on-cycle so early could actually help candidates by relieving young bankers from the distractions that come with juggling PE recruiting — like preparing for interviews or arranging coffee chats with recruiters — once their IB jobs get underway.

But a June recruiting process also cuts into the month between graduation and IB training that many of them set aside for travel and family — the last days of a stress-free life. The former banker, for example, cited a candidate he knew who stayed up for hours Zooming with megafund recruiters while on holiday in Thailand.

Plus, the prospect of having to freshen up on LBOs and financial modeling while on vacation risks turning off some aspiring financiers in the process, the onetime investment banker said. “I think a lot of people just gave up” and opted out this year, he told me. “They’re just like, ‘Fuck this.'”

The only winners

Perhaps, the ex-banker posited, the only group that actually benefits is the banks, which no longer have to worry about PE recruiting distracting workers from their day jobs.

“Arguably, this is good for banks because then you have kids who are focused on the job,” the former junior banker said. “I can say for myself — I was not really focused on the job because of recruiting,” he said about his experience last summer.

It all leaves me thinking about the PE recruiting cycles of the future. What does it mean for the associate classes to come? Will they be filled with only the most dedicated financiers who have never had a doubt about what they wanted to do in life? Could the process soon move directly to college campuses to lock in students who are only just exploring what they might want professionally?

In fact, we’re already seeing PE firms try to woo undergrads with new buy-side “analyst” programs that would supplant the investment-banking career path altogether. Though many of these programs are still in their infancy, the concept didn’t even exist a decade ago.

For now, there’s only one concrete lesson I’m taking from this year’s recruiting cycle — I don’t plan to be caught off guard next time by an extra-early start. To be overly cautious, I’ve already penciled in a calendar reminder for 2025: “Monitor for PE recruiting cycle kickoff.”

This time, I’m not taking any chances. Just to be on the safe side, I’ve set up my calendar alert for May 31.